Coming out of conflict: How migrant entrepreneursutilise human and social capital

Nick Williams1 & Besnik A. Krasniqi2

Published online: 2 May 2018

Abstract This paper examines how human and social capital influences the entre-preneurial activity of migrant entrepreneurs, with special reference to forced mi-grants due to conflict. The study uses Riinvest Migrant’s Survey data collected atthe end of 2008 and beginning of 2009 to estimate the probability of entrepreneurialactivity among Kosovan migrants. The findings demonstrate that host networking(foreign spouse and foreign language fluency) exerts a positive effect on entrepre-neurial activity of migrants, while co-ethnic networking is found not to be impor-tant. We show that migration experience has a positive impact on the probability ofentrepreneurship. Exposure to host country (both measured as years in migrationand age) increases probability to start a business. Educational qualifications in thecountry of origin before migration do not have any influence on entrepreneurship,while specific business training in the country of residence has a positive impact.Contributions to scholarship on migrant entrepreneurship and policy approaches tomobilise them are discussed.

Keywords Migration . Entrepreneurship . Intentions . Sample selection bias

JEL classifications P3 . L26 . F22 . C26

J Int Entrep (2018) 16:301–323https://doi.org/10.1007/s10843-017-0221-4

* Nick Williamsn.e.williams@leeds.ac.uk

Besnik A. KrasniqiB.Krasniqi@staffs.ac.uk

1 Centre for Enterprise and Entrepreneurship Studies, University of Leeds, Leeds, UK2 Department of Management and Informatics, Faculty of Economics, University of Prishtina,

Prishtina, Kosovo

# The Author(s) 2017

Introduction

As a result of globalisation and increasing immigration, there is increased interest in theeconomic activity of migrants (Ram and Jones 2008; Ivlevs and King 2012; Beckersand Blumberg, 2013; Elo 2016). Indeed, the rapid increase of international immigrationin developed countries and their contribution to economic growth and regional devel-opment has encouraged studies on migrants and their participation in labour markets,not only as employees but also as entrepreneurs (Aliaga-Isla and Rialp 2013). Migrantentrepreneurs are able to bridge international boundaries while facing numerous com-plexities including different business contexts, borders and transnational identities andcharacteristics (Brinkerhoff 2016), and at the same time are able to utilise theirentrepreneurial resources gained through internationalisation processes (Brinkerhoff2009; Terjesen and Elam 2009). As part of their resource endowment, entrepreneurscan utilise human capital, which refers to the characteristics, skills, competences andeducation that are individual endowments, as well as social capital, which refers to thenature of social relations and how they can be drawn upon for individual benefit(Williams et al. 2017). Human capital and access to networks which generate socialcapital are important for indigenous entrepreneurs as well as migrants (Bagwell 2015).

Yet, despite its emergence as a research field (Brinkerhoff 2009; Çavusgil et al.2011; Riddle and Brinkerhoff 2011; Elo et al. 2015), migrant entrepreneurship, and theresources they utilise, is still relatively under-researched (Peroni et al. 2016). There issome existing research which examines forced migration in the context of refugees andentrepreneurship (see, for example, Wauters and Lambrecht 2006, 2008; Lyon et al.2008), which shows how different forms of capital can provide migrant entrepreneurswith access to a flow of resources, new market opportunities and business ideas(Bagwell 2015). However, there remains a need for more research on evaluating theways in which migrant entrepreneurs contribute to the economy and patterns ofdiaspora business ownership (Fairlie and Lofstrom 2014). As a result, our paperexamines the entrepreneurial activity of migrant entrepreneurs, with a particular focuson migrants who have been forced to migrate due to conflict. Economies experiencingconflict experience significant levels of forced migration as a result of war as well asongoing economic and demographic challenges following the cessation of war. There isan established literature on economic migrants and their impacts on the country ofresidence (COR) (Ram et al. 2008; Vershinina et al. 2011; Barrett and Vershinina2016); yet, there is a paucity of literature which examines those who are forced tomigrate, and the role that human and social capital resources may play in themundertaking entrepreneurial activity.

As such, we fill a gap in the literature through a focus on identifying the factorswhich drive entrepreneurship among forced migrants from conflict-affected economies.In this study, we define entrepreneurs as those involved in the act of establishing abusiness or who currently own/manage a business (Williams and Williams 2012). Thekey research question is ‘How do human and social capital resources influence theentrepreneurial activity of migrants, with special reference to migrants who have beenforced to migrate?’ Our contribution is to show how forced migrants harness theirhuman and social capital resources in order to launch entrepreneurial ventures. Weshow that forced migration can have a direct impact on the resource endowments offorced migrants, limiting their short-term resources. However, over time, the

302 Williams N., Krasniqi B.A.

probability of being an entrepreneur increases as new resources are added, includingfluency of the language of the host country. Yet, despite the importance attached tosocial capital in the entrepreneurship, we find that connection to their ethnic group(denoting co-ethnic networks) has no effect on the probability of being an entrepreneur.

Our paper focuses on the post-conflict context of Kosovo, which has seen significantemigration to other parts of the world, particularly as a result of the wars of the 1990s(Adamson 2005), the break-up of the former Yugoslavia and subsequent declaration ofindependence in 2008, as well as ongoing economic and social challenges (Ivlevs andKing 2012; Möllers et al. 2015; Vorley and Williams 2017). This emigration has leftKosovo with a sizable diaspora community spread around the world. The study usesRiinvest Migrant’s Survey data collected at the end of 2008 and beginning of 2009. Thedata utilises interviews with migrants who were returning to Kosovo immediatelyfollowing the declaration of independence to examine the types of activities they wereundertaking in their COR. As such, they maintain international links with theirhomeland, although they are not necessarily diaspora entrepreneurs, defined as thosewho establish entrepreneurial activities that span the national business environments oftheir home and host countries (Riddle et al. 2010), as all or the majority of theirentrepreneurial activity takes place in their COR. The analysis shows that networkingamong the migrant entrepreneurs is a critical factor impacting entrepreneurial activity,although networking among their own ethnic community is not significant. Length ofresidency in the COR increases the probability of entrepreneurship, while educationalattainment levels do not have an influence on entrepreneurship, although specificbusiness training is important.

The remainder of the paper is structured as follows. First, the literature on the roleand impact of migrant entrepreneurs is set out, followed by an examination of forcedmigration. Next, we set out the context of Kosovo, before the analysis of the survey ispresented. The paper concludes by making a number of contributions to scholarship ondiaspora entrepreneurship and forced migration.

Literature review

The role of migrant entrepreneurs

Entrepreneurship and migration are an increasing focus of academic literature andpolicy discourse. With over 232 million cross-border migrants, the developmentimpacts of both migrants and entrepreneurs are likely to be substantial (Naude et al.2015). Many migrants engage in entrepreneurial activities; however, these individualshave been largely peripheral in mainstream discourses on entrepreneurship (Ram et al.2008). An emerging body of literature has begun to explore the experiences of suchentrepreneurs (Anderson et al. 2010; Chand and Ghorbani 2011; Koning and Verver2013), and this paper contributes to this discourse, through a focus on forced migrantentrepreneurship.

A key element of migrant entrepreneurship research has been to show a higher thanaverage rate of entrepreneurial activity, a recurring feature applying just as much to therecent waves of Somalis and Poles as to their South Asian and Hong Kong Chineseprecursors (Edwards et al. 2016). Neville et al. (2014) find that migrant enterprises are

Coming out of conflict: How migrant entrepreneurs utilise human and... 303

not generally better performing than those of non-migrants and that very oftenimmigrant-owned firms underperformed; migrant firms who export are found toperform better. Within this, typical measures in firm performance such as experience,skills, gender, access to finance and growth orientation were found to apply in equalmeasure to both migrant and non-migrant enterprises (Naude et al. 2015). Yet, suchgroups have rarely figured in contemporary debates on entrepreneurship, other than in afew notable studies (Edwards et al. 2016; Ram et al. 2008). Indeed, given the diversityof ethnic and migrant entrepreneurship, it has been argued that research and practicehave entered a phase of ‘super-diversity’, which aims to underling of complexitysurpassing what has previously been experienced, and is distinguished by a dynamicinterplay of variables among an increased number of new, small and scattered, multi-ple-origin, transnationally connected, socio-economically differentiated and legallystratified immigrants (Vertovec 2007).

As Ram et al. (2017) state, this new ‘super-diversity’ has presented challenges forresearchers, for example, the unprecedented geographical hyper-mobility of the post-Soviet East Europeans (Legrain 2007) and the active transnational networks of Africangroups (Thompson 2016). At the same time, however, such changes do not generallytranslate into changes in performance, with new migrant business owners experiencingstructural disadvantages similar to their predecessors (Edwards et al. 2016; Jones et al.2014).

In common with entrepreneurs more broadly who can enter activity out of oppor-tunity or necessity (Williams and Williams 2014), migrants arriving in a new countrycan be both pushed and pulled into entrepreneurship. With regards to push dynamics,migrants can face a range of labour market obstacles, which leaves entrepreneurialactivity as their only option for generating income (Gilad and Levine 1986; Elo 2016).Such individuals can face discrimination from the indigenous population, lack relevantforms of cultural capital (knowledge and language skills in the host country) and also toaccess to host-country relevant social capital (Neville et al. 2014). For these individuals,developing forms of entrepreneurial activities is viewed as a survival strategy (Portes1994), which involves relying on the social capital of their ethnic group (Drori et al.2009) in the absence of any other relevant economic options. With regards to pushdynamics, migrant groups can also be characterised as having a strong sense of self-sufficiency (Legrain 2007), which pulls them into forms of entrepreneurship as a meansof ‘getting by and getting on’ (Anderson et al. 2010). Indeed, those with highlydeveloped skills and numerous alternatives for their career and livelihood who embarkon entrepreneurial endeavours (Mullings 2011), as well as those who are not pushed tomigrate by necessity, but who choose to become migrants to fulfill their entrepreneurial,career or social goals and dreams (Elo 2016). Yet, the push/pull dichotomy can beconsidered to be simplistic, as often motivations will shift over time and will bedependent on context (Williams and Williams 2012). Indeed, in the case of forcedmigrants as the resources that they can access change over time, we posit that this willinfluence their motivations. While forced migrants may enter entrepreneurship out ofnecessity initially, as they acquire more resources, in particular through the develop-ment of human and social capital, they will be exposed to more opportunity-drivenentrepreneurship.

Whether they enter entrepreneurship can also be determined by ethnicity (Fairlie andMeyer 1996). Ethnic characteristics can act as drivers for some migrant groups to be

304 Williams N., Krasniqi B.A.

more entrepreneurial than others, including the ability to develop entrepreneurialstrategies effectively (Chaganti and Greene 2002), or use their ethnic resources (i.e.access to social capital within an embedded network) in the new country (Chand andGhorbani 2011; Koning and Verver 2013). As such, migrants can exploit the underde-veloped markets which have emerged within ‘ethnic enclaves’ in the host country(Koning and Verver 2013), using their access to ethnic and migrant networks andaccess to informal sources of finance and labour through ethnic ties and/or sharedcultural values and language use (Vershinina et al. 2011). In examining access todifferent forms of capital, finance and opportunity, an important development inexamining migrant entrepreneurship has been the emergence of a mixed embeddednessapproach to understand migrant forms of entrepreneurship (Ram et al. 2008;Kloosterman 2010; Vershinina et al. 2011). This approach takes into account theembeddedness of migrant entrepreneurs within co-ethnic networks and seeks tocontextualise them within broader social, political and economic spaces within the hostcountry (Ram et al. 2008). It focuses on the many difficulties that migrant entrepreneursface in the host country (access to finance, access to training) as necessarily part of thesocial and political context of the host country (Ram et al. 2008). As such, the mixedembeddedness approach argues for the need to focus not only on ethnic strategies butalso personal strategies within specific opportunity structures, markets and regulatoryenvironments.

Human capital and migrant entrepreneurship

The key constructs of human and social capital will have an impact on not onlyindigenous entrepreneurs, but also crucially for migrant entrepreneurs (Bagwell2015), including those who are forced to migrate. Human capital consists of charac-teristics, skills, competences, education etc. that are inextricably tied up with theindividual and that have a positive impact on him/her (Becker 1975). While linksbetween human capital and entrepreneurship are the subject of debate, it has beensuggested that there is a positive relationship between more formal human capital in theshape of higher educational attainment and entrepreneurship due to greater skillsassociated with opportunity recognition (Williams et al. 2017). Furthermore, morehighly educated individuals are expected to have higher ability and a superior infor-mation set, and therefore more start their own businesses (Constant and Zimmerman2006). As Wauters and Lambrecht (2008) state the process for leaving one’s home tostart a new life in a new country is self-selective, with immigrants often being moreprepared to take risks than those who stay at home, yet this does not apply to forcedmigrants as they have to leave their country, often quite suddenly, and thus lose accessto social capital. Among these are also older people and people with country-specificskills and qualifications who in normal circumstances would not leave their homecountry (Gold 1988). For such migrants, over time, the stock of human capital acquiredin the COR may better fulfill the needs of the host-country labour market (Bean et al.2004). This means that as more human capital is acquired in the COR, it may increasethe opportunities for salaried employment, rather than entrepreneurship (Donato et al.2008). Given this discussion, we propose the following hypothesis to examine the roleof human capital in migrant entrepreneurship:

Coming out of conflict: How migrant entrepreneurs utilise human and... 305

Hypothesis 1: Migrants with higher level human capital: 2a) education beforemigration) 2b) participated in any business related training in COR; experience(years of migration) are more likely to be engaged in entrepreneurial activity ascompared to their counterparts

Social capital and migrant entrepreneurship

Within the entrepreneurship literature, social capital is often seen as a resource,enabling migrant entrepreneurs to access co-ethnic social networks in order to gainfinance (Vershinina et al. 2011). One of the most important contributions linking socialcapital to knowledge networks is that of Nahapiet and Ghoshal (1998), which focuseson the importance of social capital and the advantages and intellectual capital creation itfacilitates through personal relationships which fulfill social motives such as sociability(Portes 1998), approval and prestige. Within this, the structural dimension refers to theinteractions, network connections, patterns and strength of ties; the cognitive dimensionconsiders shared vision, purpose and meaning, normally as a result of the shared historyin families; while the relational dimension regards to trust, norms, obligations andidentity, and also the quality of the connections. Social capital depends in the context;hence, higher levels of social capital indicate mutual interdependence between actors(Nahapiet and Ghoshal 1998). This work is particularly useful, not only because itmakes the link between intra-organisational networks, knowledge and social capital,but because it focuses on the combination and exchange of knowledge in relation tofactors such as access, motivation, capability and anticipation of value (Williams et al.2017).

Most commonly, social capital consists of the perceived value inherent in networksand relationships generated through socialisation and sociability as a form of socialsupport (Borgatti and Foster 2003). The network space can be defined by the nature ofthe relationships, interactions and ties underlying particular networks (Williams et al.2017). For example, Putnam’s (2000) analysis of social capital presents an intricateexamination of the types of network space occupied by actors across a range ofinterpersonal networks. The network can be perceived as the sum of the invisible linksbetween nodes that form the network, and as such, these links provide the relationshipand channels of communication between individuals (Jack 2005). However, these linksare not simply relationships and channels of communication, they also act as themechanism through which information and resources are drawn from, and exchangedwith, the social context and provide the vehicle through which an individual learnsabout the social context and the social context learns about an individual (Jack andAnderson 2002). They also provide the bridges to new information and resources inother social structures and bond the various relationships between nodes together(Granovetter 1973) and are the key to unlocking and accessing the social capital thatresides within a network (Anderson et al. 2007). Social capital’s power is its ability tounderstand how individuals are able to mobilize their network to enhance personalreturns usually within place-bound environments (Westlund and Bolton 2003).

Social capital is a product of aggregated resources held within durable networks(Ram et al. 2017). While migrant networks vary in terms of the number of actors theyincorporate, their location, the benefits they provide to individual members and the

306 Williams N., Krasniqi B.A.

strength of relations between network actors can all influence economic activity(Smallbone et al. 2010; Lajqi and Krasniqi 2017). Indeed, networks offer migrantentrepreneurs invaluable and unique competitive advantages, making them fundamen-tal to the growth and success of their own businesses, and a potential resource forharnessing entrepreneurship (Nielsen and Riddle 2010). Yet, the social networks thatforced migrants can access are likely to be less extensive than that of voluntaryeconomic migrants, who are often better able to access social capital through ethnicties and/or shared cultural values (Vershinina et al. 2011). Due to the forced and suddennature of their flight, they can lack networks in their COR, with the only option being todevelop them over time. As they have experienced traumatic events both in theircountry of origin (COO) and during flight which can cause psychological problemswhich hamper self-reliance and entrepreneurship (Hauff and Vaglum 1993). Also, as aresult of the nature of conflict, they are often unable to return home to acquire funds,capital or labour for their ventures which would supplement their limited social capitalin the COR (Wauters and Lambrecht 2008). In order to examine social capital andmigrant entrepreneurship, we propose the following hypothesis:

Hypothesis 2: There is a positive relationship between higher social capital: 1)fluent in COR language 1b) foreign spouse, 1c) co-ethnic networking of migrants,1d) family size and probability of being an entrepreneur

Forced migration and entrepreneurship

While the economic impacts of voluntary labour migration have been examined, theliterature on the development impacts of forced migration needs to be deepened (WorldBank 2009). In recent years, forced migration due to conflict has reached its highest levelsince World War II, affecting more than 51 million people around the world (World Bank2014).While forced displacement is often viewed as a humanitarian issue, given that it hasimpacts on growth, employment and public spending for countries of both origin anddestination, it is also a major development issue. The majority of forced displacement isdriven by conflict, generalized violence and/or human rights violations (UNHCR 2014).Palestinian refugees continue to comprise the biggest refugee group worldwide, with othermajor source countries for refugees being Afghanistan, Syria, Somalia, Sudan, theDemocratic Republic of the Congo and the Central African Republic, while furtherdisplacements have been seen through conflict in Iraq and Ukraine (UNHCR 2014).Many forced migrants are in protracted situations, with estimates that two-thirds ofrefugees have been in exile for more than 5 years (World Bank 2014).

In the COR, the influx of displaced people impacts on growth and public policy aimedat integrating new populations and providing economic opportunities (Wauters andLambrecht 2008). Increased labour supply can impact on wages depending on whetherthe forced migrants complement or substitute the skills of local workers, while growth isenhanced if migrants bring new skills and additional sources of financing, and increasetrade and domestic demand (Enghoff et al. 2010). At the same time, an influx of forcedmigrants can place pressure on public services, and to counterbalance these effects, theCOR needs to increase public expenditure, while at the same time developing policies toenhance social cohesion (World Bank 2014). For the forced migrants themselves,

Coming out of conflict: How migrant entrepreneurs utilise human and... 307

displacement has impacts on their human and social capital, income and employment, aswell as entrepreneurial opportunity (Jacobsen 2005). Because of the nature of the dis-placement, forced migrants face significant loss of assets and networks, and this differen-tiates them from economic migrants (Ibanez and Moya 2009).

A key challenge of public policy is to find resilient solutions to the increasingnumber of refugees in protracted displacement situations (World Bank 2014). Thismeans that policy makers need to examine not only the vulnerabilities of forcedmigrants, but also ways in which the COR can make the most of their education, skillsand experience. One element of this which is currently under-researched is the role thatentrepreneurship can play. A key unexplored question regarding forced migrants is theways in which their resources may be harnessed in order to develop entrepreneurialventures which have the potential to benefit the economy of the COR. We contend thatforced migrants face acute occupational choice constraints. In the context of forcedmigrants, it can be argued that they were not ‘prepared’ for migration as they were notresponding to opportunity, for example they had not secured employment beforemigration and/or were not responding to start a business. Also, the level of skills theyacquired in their COO may not be adequate to respond the needs of labour market inWestern countries. In such circumstances, migrants do not have many employmentoptions and may be pushed to entrepreneurial activities. Accordingly, this discussionleads as to following hypothesis:

Hypothesis 3: Forced migrants are more likely to be entrepreneurs compared tonon forced migrants

Empirical focus

The breakdown of the communist regime in the early 1990s was the beginningof the end of Yugoslavia and led to significant economic and political changeacross the Balkans. Several unsuccessful military campaigns to unite Serbs inneighbouring republics into a ‘Greater Serbia’ resulted in wars in which thou-sands were killed and many more became refugees. In Kosovo, some 800,000people out of a population of 1.8 million were forced to flee the country,another 400,000 were forced to flee their homes and hide within Kosovo;10,000 people were killed, and 3000 were abducted (Kellezi et al. 2009).Following NATO intervention and the conclusion of the wars, the formerYugoslavia was split into different nations, including Serbia which containedthe formerly autonomous province of Kosovo. However, following the contin-uation of political and ethnic tensions, Kosovo unilaterally declared its inde-pendence in 2008 (Yannis 2009; Ivlevs and King 2012). It remains one of thepoorest states in Europe (Ivlevs and King 2012; Krasniqi and Mustafa 2016;Williams and Vorley 2017) and has been plagued by high unemployment, lowlevels of growth, high levels of poverty and poor infrastructure (Krasniqi 2007;Hoxha 2009; Krasniqi 2014).

Kosovo has experienced four key waves of migration (Riinvest 2007; Vathiand Black 2007; UNDP 2012, 2014). During the 1960s, relatively unskilled(mainly) men from rural areas of the country emigrated to Germany and

308 Williams N., Krasniqi B.A.

Switzerland as ‘guest workers’, and during this wave, those who emigrated sentmoney home which was often used to invest in houses. This migration flow ofKosovar Albanians was due to Yugoslavia’s move to liberal economic reformsin 1965, which included the opening of borders (King et al. 2010). Kosovo’seconomic and political status under the former Yugoslavia was characterized bylow industrial development and high unemployment, and as a result, substantialKosovan migration also took place to other parts of Yugoslavia at this time.The flow of migration decreased briefly in the 1970s when new jobs werecreated in the public sector and socially owned enterprises in Kosovo. At thatstage, Kosovo gained autonomous political status within the former Yugoslavia(UNDP 2014). However, even with the improved political status of Kosovounder Yugoslavia, there was still a high unemployment push for migration forthe remaining working age population which was not able to be absorbed bythe public and/or social enterprises sector. In the 1970s, the share of Albaniansin the working age population was 68% while the share of the employed labourforce was only 55%, and the share of Serbs in the working age population was23%, whilst the share of employed labour was 33% (Bartlett 1990). As is clear,there was discrimination on ethnic grounds in the Yugoslav labour market.

In 1989, Kosovo’s autonomy was abolished and more than 150,000 ethnicallyAlbanian workers were dismissed from the public service and socially ownedenterprises pushing them either towards entrepreneurship in Kosovo or to migrate(Krasniqi 2012). Skilled and educated young men from both rural and urbanareas migrated to Western European countries to find jobs and to escape fromYugoslav military service. Migration was seen as a means to escape poverty andimprove the quality of life for family members left behind through remittances(UNDP 2014). When war broke out in 1998, many people were forced tomigrate, mostly to Albania, Western Europe and the United States, and thenwhen the war ended in 1999, Kosovo experienced a rapid return of the displacedpopulation (UNDP 2014). Following the war, while progress was made towardspolitical stability in Kosovo, immigration policies of Western European countriesbecame less favourable for Kosovars. As a consequence, emigration waves havemainly consisted of migration for family reunification purposes, irregular migra-tion of unskilled young people and (temporary) legal migration of highly skilledand highly educated individuals through study or work arrangements (UNDP2014).

The latest figures estimate that Kosovo’s diaspora is estimated at approximately700,000 people, equivalent to 40% of the resident population (UNDP 2014). Kosovo’sdiaspora reside in the some of the most highly industrialised Western economies, wherethey are able to accumulate substantial capital, gain advanced skills and developeffective networks. The largest shares of Kosovar migrants are estimated to be inGermany (33% of the diaspora population) and Switzerland (25%), followed by Italy(8%), Slovenia (6%), Austria (6%) and the USA (4%), with the remainder mostly inScandinavian and Benelux countries (Kosovo Agency of Statistics 2013). Approxi-mately 95% of the household heads in these countries are employed (Office of thePrime Minister 2016), although figures on the proportion of those who are entrepre-neurs are not available.

Coming out of conflict: How migrant entrepreneurs utilise human and... 309

Research design and data

The study uses Riinvest Migrant’s Survey data collected at the end of 2008 andbeginning of 2009.

This study is supported financially by Foundation for Open Society in Kosovo,Balkan Trust for Democracy, Friedrich Ebert Stiftung. One of the authors isRiinvest research affiliate and has been working for Riinvest for several years,therefore was part of the team and had access to data. The data were collected bytrained enumerators. The data is based on a large survey of 715 (few observationwere deleted for inconsistency or missing observations) migrants and containsdetailed information about the individual characteristics (e.g. gender, age, educa-tion, occupation status, income [if working] and migration history), householdcharacteristics (e.g. household size, marital status and share of employed familymembers). The aim of the Riinvest’s survey was to investigate the profile,characteristics and the potential of Kosovan diaspora for development of thecountry. The unit of analysis was individual migrant living abroad. The detailson interviews were confidential—fully anonymised.

We use intercept point sampling with location sampling or aggregation pointsampling (McKenzie and Mistiaen 2009; Krasniqi and Williams 2017) which havebeen used in other similar migration studies in USA and Mexico (e.g. Wassermanet al. 2005; Bustamante et al. 1998). There is no exact size of our populationframe of Kosovan diaspora, but the intercept point sampling ensuresgeneralisability of results and it is first best method to track migrants. Theintercept point sampling design included interviews with migrants in bordercrossing points of Kosovan Diaspora (Prishtina International Airport, Hani iElezit, Merdare, Porti i Durrsit in Albania, Gjilan). Multiple border locations werechosen for better coverage of the population of interest, as suggested by McKenzieand Mistiaen (2009). These multiple crossing points are the main entrance routesto Kosovo for more than 90% of migrants. Systematic sample is employed toselect random individuals crossing the border at the specific the location duringthe specified time periods during the day.

The advantage of our survey is that it was undertaken during December 2008 andJanuary 2009, which marked a major flow of migrants to Kosovo, especially consid-ering that in 2008 the country declared its independence and the migration flow (both toKosovo and externally) was at its peak. This allows better representation of interceptingmigrants by allowing us to survey individuals who are seldom found in Kosovo. Thissampling design is feasible in cases where the sampling frame is absent, because it isimpossible to have a list of the total number of migrants (see McKenzie and Mistiaen2009; Gedeshi and De Zwager 2012; Krasniqi and Williams 2017, for similarapproach) and is much closer to random sampling (McKenzie and Mistiaen 2009).Although our study uses data from 2008/2009, the results and hence conclusions arecoherent with the current situation of migration and their entrepreneurial activityabroad, mainly in EU. Moreover, the results are comparable, and recommendationsmay be applied to the other context in terms of entrepreneurial activity of migrants inEU. In addition, the theories we test—mainly human capital and social capital—implythe use of variables that are not sensitive to time, such as foreign spouse, foreignlanguage, networking, forced migration.

310 Williams N., Krasniqi B.A.

Model

To analyze the relationship between the individual and socio-demographic and entre-preneurial of Kosovan diaspora, we use a series of binomial logit regression models,where,

yi ¼ 1if i is self −employed0if i is employed

n

The binomial logit takes the following general form:

yi ¼ X iβ þ ε

where yi is the dependent variable indicating whether the individual migrant is anentrepreneur and own a company, and Xi is the vector of explanatory variables(individual and socio-demographic level variables). The description of explanatoryvariables used in the regression analysis is presented in Table 1 in the Appendix.

Results

To evaluate the effect of personal, socio-demographic and networking variables on theprobability of entrepreneurship among Kosovan migrants, we here report the resultsfrom a series of logit regression models. The first regression in the analysis estimated abaseline model with individual level variables including gender, age, marital status,employment of family members, university education before migration, businesstraining in host country. In addition, we have included variables to measure theconnection to diaspora, whether the migrant was forced to migrate or not, if migranthas a foreign spouse and proficiency in host country language, as this can have animpact on entrepreneurial activity (Wauters and Lambrecht 2006, 2008). These vari-ables are intended to capture the effect of acculturation and adaption to host country.We have also included some control variables such as years of migration, family sizeand dummy variables if migrant has had secured a job before migration. All regressionmodels passed the Wald test, indicating that all independent variables are jointly andstatistically significant and different from zero. Correlation matrix reported in theAppendix concludes that multicollinearity is not a problem in our data, as correlationcoefficients are generally low. All maximum likelihood models have passed thestatistical test for joint statistical significance of explanatory variables (seeWooldridge 2005).

Model 1 in Table 2 in the Appendix reports that the probability of being entrepreneuris increased with age, if the migrant is male, is fluent in the language of the hostcountry, and has been forced to migrate, when taking into account and holding constantother characteristics, and is line with Wauters and Lambrecht’s (2006, 2008) findingsthat such capitals can influence the activity of forced migrants. This reveals that malemigrants have a higher likelihood than women to be an entrepreneur, which is similar toearlier studies in other global regions (Caliendo et al. 2014b; Caliendo et al. 2014a;

Coming out of conflict: How migrant entrepreneurs utilise human and... 311

Tab

le3

Correlatio

nmatrixof

explanatoryvariables

Variables

12

34

56

78

910

1112

13

1Gender(m

ale=1)

1.000

2Migrant’sage

0.183

1.000

3Migratio

nduratio

n(years)

0.060

0.639

1.000

4Maritalstatus

(married

=1)

0.094

0.353

0.152

1.000

5Employed

family

mem

bers

0.042

0.364

0.302

0.292

1.000

6Fluent

inCORlanguage

−0.090

0.203

0.271

0.027

0.141

1.000

7University

educationpriormigration

−0.132

−0.149

−0.208

−0.017

−0.080

0.104

1.000

8Businesstraining

inCOR

−0.040

−0.013

−0.021

0.019

−0.003

0.052

0.010

1.000

9Co-ethnicnetworking

inCOR

−0.076

0.011

0.079

−0.039

0.015

0.040

−0.011

−0.032

1.000

10Fo

rced

migratio

n(K

osovoWar,1

999=1)

0.008

−0.008

−0.092

−0.033

−0.037

0.022

−0.016

−0.021

−0.005

1.000

11Fo

reignSp

ouse

0.018

−0.083

−0.083

0.178

−0.004

0.186

0.115

0.003

−0.011

−0.004

1.000

12Family

size

0.014

0.405

0.282

0.521

0.640

0.093

−0.084

0.003

−0.018

−0.025

0.011

1.000

13Securedjobin

CORbefore

migratio

n−0.006

0.064

0.009

0.027

0.076

0.040

0.124

0.027

0.059

0.015

0.061

0.029

1.000

312 Williams N., Krasniqi B.A.

Krasniqi 2009). Findings suggest that connection to their ethnic group (denoting co-ethnic networks) has no effect on the probability of being an entrepreneur. This effectmay be compensated by the other variables that a found to be highly statisticallysignificant such as connection and networking to host country network and accultur-ation. This is in line with previous studies suggesting that contacts and networking withnative population are critical, referred to in the literature as an element of bridgingsocial capital (Putnam 2007), and contrasts with other studies which suggest that ethnicco-networks may help with access to resources and information in helping theirmembers to set up their own business, using previous experience acquired by theestablished immigrant communities (Levie 2007; Masurel et al. 2004; Jones et al.2010).

The variable ‘fluent in foreign language’ is statistically significant suggesting thatindividuals are socialised and well networked with native population. This mayincrease the chances of spotting and developing entrepreneurial opportunities andgetting help from native friends, as well as benefitting from their network. This findingis reinforced in model 2 when introducing the variable foreign spouse, which is foundto be highly significant and positive. Being married to a native of the COR exposesmigrants to better access to information and networks and of course may have betterlegal status as migrants. This study is similar to other studies that found that marriedimmigrants are more likely to go into entrepreneurship (Constant and Zimmermann2006). According to Constant and Zimmermann (2006), marital status plays a role inentrepreneurial activity in two ways. First, marriage brings stability, and married men, ithas been shown, are more productive through the division of labour and householdproduction, which in this case can increase their likelihood of being business owner.Second, married men can benefit from their wife’s support and can count on her helpingwith their business as well. Being married can act as a risk-sharing phenomenon andmarried men who are entrepreneurs can also count on their wife’s stable income, if sheis working, while enabling him to use his income for business (Krasniqi 2009).

To control for differences in the initial stock of human capital, we use the variableeducation before migration in home country and variable denoting any specific trainingin destination country. We include these two separate variables in regression. We findno evidence of education of the migrant before migration, suggesting that the quality ofeducation in Kosovo is not adequate and supportive for building entrepreneurial skillsnecessary for start-ups. Considering that diaspora in our sample is usually located inEU Countries and USA, this may suggest that education in Kosovo is not in line withrequirements of developed market economies. While origin-country human capitaldoes not necessarily restrict salaried employment chances, because they usually dolow skilled work with few educational requirements, it may constrain the probability ofbeing an entrepreneur. As Kanas et al. (2009) argue, migrants entering entrepreneurshipneed access and ability to process large and complex business-related information (e.g.market size, consumer products or reliable suppliers) which is country specific. Thissupports our finding that having a foreign spouse and being fluent in the language ofthe COR may compensate for a lack of skills and information needed for start-up. Inaddition, our analysis finds that securing a job prior to migration influences thelikelihood of becoming an entrepreneur. This may be because this first job providesthem access to a wider network, often outside of their own ethnicity, which they canlater exploit to launch an entrepreneurial venture.

Coming out of conflict: How migrant entrepreneurs utilise human and... 313

On the contrary, any additional training (variable business training in model 2)migrants received in those countries seems to play a significant and positive impacton probability of being a business owner. Constant and Zimmermann (2006) maintainthat better educated individuals are expected to have higher ability and allow individ-uals to know more and to have superior information set, we would expect that moreyears of schooling will push individuals into entrepreneurship. Those with educationand work experience acquired in the COR will tend to better fulfill the needs of thehost-country labour market (Bean et al. 2004). Therefore, the stock of human capitalaccumulated in the host country tends to increase the opportunities for salaried em-ployment and decrease the likelihood of entrepreneurship (Bean et al. 2004; Donatoet al. 2008). Migration experience is another important factor determining the proba-bility of being a business owner. Specifically, we create the variable to measuremigrant’s exposure to the host country business environment as well as accumulatedlabour market experience. The variable years in migration suggest that there is aninverted U-shaped relationship between probability of being a business owner and yearin migration. In our model, the turning point where the effect of years in migration ofentrepreneur becomes zero is 14.38 years.1

Finally, we did not find evidence that employed family members and family sizehave impact on entrepreneurial activity of migrants. The findings contrast with aprevious study on immigrant entrepreneurs in Sweden revealing that family resourcesare important for immigrants to integrate economically into a country (Bird andWennberg 2016). We find that for migrant entrepreneurs, it is more important tocapitalise from benefits of marriage with a native of the COR than from familyresources (family size and employed family members).

Discussion

The contribution of our paper is to show how migrants harness their human and socialcapital resources in order to undertake entrepreneurial activity. The analysis shows thatthe probability of being entrepreneur is increased with age, if the migrant is male, isfluent in the language of the host country and has been forced to migrate, when takinginto account and holding constant other characteristics. It demonstrates that malemigrants have a higher likelihood than women to be an entrepreneur. In addition,connection to their ethnic group (denoting co-ethnic networks gained through socialcapital) has no effect on the probability of being an entrepreneur, suggesting thatbridging social capital is limited in terms of entrepreneurial development (Williamset al. 2017). This effect may be compensated by the other variables that are found to behighly statistically significant such as connection and networking to the host countrynetwork and acculturation, meaning that social capital can be accessed across interna-tional borders. This contrasts with other studies which suggest that diaspora co-

1 Following Wooldridge (2003, p.187) in the estimated equation years in migration and years ofmigrationsquared the turning point (or maximum of the function) is always achieved at the coefficient onyears in migration over twice the absolute value of the coefficient on years in migration squared. In our casethis measures the point where the effect of years in migration of entrepreneur becomes zero (|years inmigration/(2*years in migration squared)|). In our case |-0.00591/(2*-0.00591)| = 14.38. The same calculationwas done for age of the migrant and we did find following |0.144/(2*-0.00124)| = 0.144/0.00248 = 58.06.

314 Williams N., Krasniqi B.A.

networks may assist in accessing social capital which help migrants to set up their ownbusiness previous experience acquired by the established immigrant communities(Levie 2007; Masurel et al. 2004; Jones et al. 2010). Being fluent in the foreignlanguage of the COR is statistically significant, suggesting that human capital isenhanced through language skills, and that social capital is developed as individualsbecome more socialized and networked with the native population, and may increasethe chances of identifying and developing entrepreneurial opportunities and gettinghelp from native friends. Human capital associated with fluency in the foreign languagerepresents higher human capital, but also that they are able to access a wider network ofsocial capital resources in the COR.

Furthermore, being married to a native of the COR exposes migrants to better accessto bridging social capital, and of course may have better legal status as migrants.Marital status means that married males can benefit from their wife’s support, and beingmarried can act as a risk-sharing phenomenon as one partner’s income can be used todevelop the entrepreneurial activity of the other. Here, the work of Nahapiet andGhoshal (1998) is instructive as the structural, cognitive and relational dimensions ofsocial capital can have an important impact on activity. We add to this literature byshowing that access to wider social capital through marriage to a native of the COR cancreate more collective trust and shared knowledge, which benefits the migrant as wellas the wider economy if those networks can be effectively utilised. Given that socialcapital depends on the context in which it is gained, higher levels indicate mutualinterdependence between actors (Nahapiet and Ghoshal 1998), as marital status andfamily links not only increase capital endowments, but also act as a risk-sharingphenomenon.

Migrant entrepreneurs often take on transnational characteristics, which are a mix oflearned cultural and social behaviours from their country of origin and host country(Kshetri 2013) and which give them advantages in conducting entrepreneurship(Bagwell 2015). Yet, our findings demonstrate that these advantages are deferred ashuman and social capital is developed by the forced migrants. Indeed, we show thateducation of the migrant before migration is not significant, suggesting that the qualityof education in the COO, in this case Kosovo, is not adequate and supportive forbuilding entrepreneurial skills necessary for start-ups. However, any additional busi-ness training that migrants gain in their COR seems to play a significant and positiveimpact on the probability of being an entrepreneur, showing that such human and socialcapital is acquired over time and impacts on entrepreneurial activity. This demonstratesthe lack of ‘preparedness’ of forced migrants as they are not moving to exploit anopportunity which utilises their skills; rather, they move involuntarily as a result ofconflict and then need to acquire skills for them to exploit entrepreneurial opportunity.

Conclusions

The key research question for this study was ‘How do human and social capitalresources influence the entrepreneurial activity of migrants, with special reference tomigrants who have been forced to migrate?’ In the above discussion, we show the roleof human and social capital in fostering entrepreneurial activity among forced migrants.The capital endowments of forced migrants can be weak, characterised by low levels of

Coming out of conflict: How migrant entrepreneurs utilise human and... 315

human capital and limited social capital access in the COR. However, through educa-tion and training, as well as access to wider networks, social capital can be built up overtime and plays an influence in fostering entrepreneurial activity.

The results of our study are important considering that migration is an ever moreimportant phenomenon, with millions of people moving around the world either inresponse to better economic opportunities outside their COO or in response to someform of crisis (World Bank 2014). These waves of migrants are not simply a human-itarian issue, but also an issue of economic development both in the COO and the COR.Our study focuses on how human and social capital endowments of forced migrantsinfluence their likelihood to be an entrepreneur in their COR. Despite its growth as anarea of study, the entrepreneurial activities of migrants do not seem to be prominentwithin ‘mainstream’ entrepreneurship research (Ram et al. 2017), and there is even lessengagement with the topic of forced migration (Bagwell 2015).

As such, there is great scope to expand this understanding, and a key area which isunder-researched is that of forced migration. Such migration, often by individuals whohave to leave their COO suddenly, creates its own pressures on the COR, withincreased labour supply impacting on wages depending on whether the forced migrantscomplement or substitute the skills of local workers, as well as the potential forenhancement of skills and other resources and increase trade and domestic demand(World Bank 2014). However, pressure is also placed on public services, and the CORneeds to respond effectively. For the forced migrants themselves, displacement hasimpacts on their human and social capital, income and employment, as well asentrepreneurial opportunity (Jacobsen 2005). Because of the nature of the displace-ment, forced migrants face significant loss of assets and networks, meaning that socialcapital built up over time in their COO can be lost. As policy makers seek new andmore effective methods of integrating migrants and maximising their economic andsocial potential, exploring the potential of (forced) migrants to be entrepreneurs may bean effective avenue for policy support (Wauters and Lambrecht 2008).

With regards to policy implications, as with most aspects of entrepreneurship policy,there is no magic bullet (Huggins and Williams 2009, 2011). However, countriesreceiving large waves of forced migration should consider providing training forbusiness start-ups as this seems to have a significant effect on preparing migrant toenter into entrepreneurial activity. As the World Bank (2014) has made clear therecently approved Sustainable Development Goals (SDGs) place pressure on countriesto ensure safe, orderly and regular migration, limiting exploitation and abuse, and onepath towards this is ensuring the entrepreneurial capacity of the migrants is harnessed.By doing so, these countries can compensate for the often inadequate entrepreneurialskills gained from the migrants’ COO, and thus increase their productive potential. Theimprovement of entrepreneurship curricula and embeddedness in school and universityeducation should be a priority, so that it may assist in fostering the entrepreneurialactivity of future migrants at home and abroad. This is particularly important consid-ering that approximately 36% of recent refugees in Europe are children. Increasing theirentrepreneurial skills while at school may not pay a short-term dividend, but over timecan positively impact on their entrepreneurial potential and thus wider economicgrowth (World Bank 2014).

We acknowledge that the article contains some inherent limitations. Our study tookplace in 2008/2009 and focused on migrants returning to Kosovo. This limits the

316 Williams N., Krasniqi B.A.

generalisability of our findings, as it does not consider migrants in situ within their hostcountry. While the article focuses on the single country context of Kosovo, which againlimits generalisability, it nonetheless provides lessons for other countries (both theCOO and COR) where conflict has seen forced outward migration. Recent examples ofSyria and Ukraine demonstrate how conflict creates large migration movements (WorldBank 2014) and how countries often struggle to provide effective solutions, either ontheir own or part of supranational bodies. Future research is needed to examine howthese waves of migration have an impact on development, and how the skills, experi-ence and knowledge of forced migrants can be harnessed to benefit themselves, theircountry of residence and their country of origin.

APPENDIX

Table 1 Description of variables

Variables Meaning Measurement

Dependent variable

Self-employed(1 = yes)

Migrants does some entrepreneurialactivity in the form of self-employmentin migration country

Takes value of 1 if migrant is entrepreneur incountry of residence migrants country ofresidence, 0 otherwise

Control variables

Gender (male = 1) Gender of migrant Takes value of 1 if migrant is female, 0otherwise

Migrant’s age Age of migrant at the interviewing time Number of years

Migrant’s agesquared

Age of migrant at the interviewing time Number of years squared

Migrationduration(years)

Number of years since the migrant isabroad

Number of years abroad since emigrated forKosovo

Marital status(married = 1)

Civil status of the migrant Takes value of 1 if married, 0 otherwise(single, engaged, divorced, widowed)

Independent variables

Employed familymembers

Employment of family members and risksharing

Number of family members who are above18 and are employed

Fluent in CORlanguage

The migrant’s fluency of country ofresidence language

Takes value of 1 if migrant speaks fluentlylanguage of COR, 0 otherwise

Universityeducation priormigration

Educational attainment of migrant prior totheir migration

Takes value of 1 if migrant has completeduniversity education prior his/heremigration, 0-otherwise

Business trainingin COR

Migrant’s participation in any businesstraining programin COR

Takes value of 1 if migrant has completedany training program in business in COR(business planning, finance, marketing,etc.), 0 otherwise.

Co-ethnicnetworking inCOR

Migrant’s connection with co-ethnicgroups

Takes value of 1 if migrant has respondedBYes, I know many or some people, tofollowing questions: Do you know any

Coming out of conflict: How migrant entrepreneurs utilise human and... 317

Table 1 (continued)

Variables Meaning Measurement

person from your COO, who lives nearyou, 0-otherwise.

Forced migration(Kosovo War,1999 = 1)

Conflict/War induced Diaspora Takes value of 1 if migrant has left Kosovobecause of War in 1999, 0 otherwise

Owns property inmigrationcountry

Ownership status of migrant Takes value of 1 if migrant owns property inmigration country, 0-otherwise

Foreign spouse Marriage with foreign spouse Takes value of 1 if migrant is married withforeign origin spouse, 0-otherwise

Family size Number of family members livingtogether

Number of family members

Secured job inCOR beforemigration

The migrant had secured job and incomefor living m COR

Takes value of 1 if respondent answered Yesto this question: I have had a secured jobprior migration to COR, 0 otherwise.

Table 2 Logit regression estimates; determinant of self-employment among Kosovan migrants

(1) (2) (3) (4) (5) (6)

Variables Model 1 Model 2 Model 3 Model 4 Model 5 Model 6

Control variables

Gender (male = 1) 0.499* 0.319 0.310 0.305 0.279 0.308

(0.290) (0.283) (0.284) (0.286) (0.285) (0.288)

Migrant’s age 0.0201** 0.0365*** 0.142** 0.144** 0.0443 0.0374

(0.00895) (0.00894) (0.0643) (0.0647) (0.0727) (0.0738)

Migrant’s age squared − 0.00123* − 0.00124* − 2.27e-06 3.51e-05

(0.000738) (0.000742) (0.000851) (0.000863)

Migration duration(years)

0.146** 0.170***

(0.0638) (0.0652)

Migration duration(years) squared

− 0.00531** − 0.00591***(0.00214) (0.00215)

Marital status(married = 1)

− 0.0985 − 0.395* − 0.514** − 0.498* − 0.495** − 0.507**(0.211) (0.219) (0.232) (0.258) (0.236) (0.239)

Independent variables

Employed familymembers

− 0.0928 − 0.0507 − 0.0413 − 0.0334 − 0.0424 − 0.0557(0.0892) (0.0893) (0.0907) (0.106) (0.0912) (0.0925)

Fluent in COR language 0.712***

(0.156)

University education priormigration

− 0.262 − 0.275 − 0.281 − 0.284 − 0.239 − 0.292(0.284) (0.298) (0.302) (0.303) (0.309) (0.312)

318 Williams N., Krasniqi B.A.

Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 InternationalLicense (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and repro-duction in any medium, provided you give appropriate credit to the original author(s) and the source, provide alink to the Creative Commons license, and indicate if changes were made.

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